Value-based Purchasing: What Hospitals and Healthcare Systems Need to Know Now to Manage Their Medicare Dollars

Written by Pat Bickley, Product Manager Jude Odu, Senior Business Analyst Health Care DataWorks

Value-based Purchasing: What Hospitals and Healthcare Systems Need to Know Now to Manage Their Medicare Dollars
While there undoubtedly is a large degree of uncertainty surrounding the Value-based Purchasing (VBP) program developed by the Centers for Medicare and Medicaid Services and its impact on hospital systems nationwide, one thing is crystal clear: hospital executives and managers are scrambling to figure out what they can do now to protect their bottom lines. Value-based Purchasing, an outcome of the landmark health reform law, mandates that eligible hospitals of all sizes have portions of their ever-important Medicare reimbursements withheld until it is determined how they score on 20 key performance measures. They will be given the opportunity to earn back their withheld reimbursements by improving their scores on the various metrics. Score even higher in some categories, and the hospital system could very well land additional money beyond what was withheld. This scenario has hospital administrators facing myriad challenges relative to the impact of VBP on their organizations, from how they can track their scores so they can preserve reimbursements to what they will do as a go-forward strategy to take advantage of VBPs incentive component in order to secure additional dollars that might be available for the higher performers. The stakes for hospital systems indeed are high with VBP, and many are now looking for any advantage possible to navigate the pitfalls and leverage the reward component to rise above the competition. The solutions are not as complex as they seem. There are two ways hospitals of all sizes can secure more wins under the new CMS program, not only to protect their much-needed revenue, but also potentially to get an increased share of the reimbursement pie: 1. Organizational commitment. It takes a commitment from the highest levels of the hospital to involve the entire organization in the process of improving on the performance measures. Everyone, from those involved in housekeeping to physicians and administrators, needs to understand that they play a role in helping the hospital strive to perform at the highest level on each measure. After all, it is how they deliver care and perform their duties each day that

will have a direct impact on the overall scores the hospital will receive. It is important that the organization convey that everyone is a stakeholder and everyone stands to gain by improving his or her own individual performance. A culture that fosters positive reinforcement and continuous improvement will go a long way in positively impacting overall performance. 2. New data analytics solution. Under the current state in many hospitals and health systems, information is pored over manually using spreadsheets that contain data pulled from disparate sources and departments. At the same time, administrators and others responsible for performance and finances are working not only to understand the new measures, but also to determine how they can quickly and efficiently organize this disparate data to help them understand where the hospital stands. Thankfully, there are solutions available that can empower hospitals to stay abreast of their scores and performance numbers in nearly real time. Health Care DataWorks (HCD), for example, has developed a Value-based Purchasing application that enables hospitals to track, monitor and plan for their scores and outcomes, thereby putting themselves in the best position to identify areas for improvement so they can proactively improve upon measures and secure more dollars. To understand how analyzing and understanding enterprise-wide data can put hospitals of all sizes in a stronger position to manage their Medicare reimbursements, it is best to take a quick look at some of the new VBP performance measures.

There are two ways hospitals of all sizes can secure more wins under the new CMS program and potentially get an additional share on top of their full reimbursement: 1. Organizational commitment. It takes a commitment from all levels of hospital staff. Everyone is a stakeholder and everyone stands to gain by improving his or her own individual performance. 2. New data analytics solution. Track, monitor and plan for scores and outcomes. Be in a position to identify areas for improvement so the groups in question can proactively improve upon measures and secure more dollars.

Patient satisfaction and quality of care play bigger role When the 20 performance measures selected by CMS are taken into account, it is clear that there is strong emphasis on patient satisfaction and the quality of care. Here is a sampling of the performance measures: Process of Care

Acute myocardial infarction Congestive heart failure Pneumonia Healthcare associated infection Surgical infection indicators

Patient Experience

Overall rating Nurse communication Doctor communication Communication about medications Discharge information Pain management Nurse call button assistance Hospital environment

Numerous subjective factors can come into play. For example, how a physician or nurse communicates with a patient can have a direct impact on the patients satisfaction level. How housekeeping does its job can influence patient opinions as to whether they are happy or unhappy with their overall hospital experience. This means there are more outlying influencers that can directly impact the amount of Medicare dollars that a hospital receives and, as a result, affect the bottom line. Given this new environment, it behooves hospitals to gain a greater understanding of their VBP data to gauge where they stand on performance measures, in part so they can plan for financial impacts but also so they can gain knowledge to put improvement plans into place. These improvement plans could target problem areas through initiatives such as preventive care education, communications training for hospital personnel, and better housekeeping procedures.

Options are available to help hospitals better manage VBP measures Without the ability to understand and evaluate Value-based Purchasing measures in nearly real time, hospitals essentially are flying blind. It is one thing to know where you are performing poorly, and another to know why you are performing poorly and what can be done to fix it. For hospitals of all sizes, there are some key things to consider when looking for a VBP application to meet their needs. First, determine whether the application is robust enough to provide a snapshot of enterprise-wide indicators and whether it has pre-built features that eliminate the need to manually pull data related to VBP measures, which will not only simplify the process of gathering and aggregating information, but also make it easier to analyze information in nearly real time to take action. Additionally, assess whether the application can be SaaS-based and whether it is provided in one bundle, which can enhance speed to use, resulting in quicker results and ROI. Other features to consider include: A summary tab to assess all VBP measures in one view and to see the overall VBP score. A calculator to estimate how much will be withheld and how much can be made back if performance rises. What if scenario to determine how much hospitals will lose or gain if they perform better or worse in certain categories. For example, a 1 percent improvement in a metric could lead to $1 million in revenue earned back. Root cause analysis to identify and isolate problems or issues that are dragging down scores so the organization can take steps to improve a specific metric. In other words, the organization can drill down on scores and key measures to determine where improvements might be necessary in specific departments, with specific procedures, or even with specific personnel. With HCDs VBP application, this wide-ranging information is available through an easy-to-read and easy-to-understand dashboard that can be viewed on any computer screen. It can be accessed by select decision makers, data analysts and management in the financial, administrative, clinical and research departments.

Hospital administrators need an application that For hospitals of all sizes, there are some key things to consider when looking for a VBP application: 1. Is the application robust enough to provide a snapshot of enterprise-wide indicators, and does it have pre-built features that eliminate the need to manually pull data related to VBP?
2. Can the application be SaaS-

can help them improve accountability throughout the hospital. They need to view the details to know exactly which measures warrant attention and the commensurate financial repercussions if the hospital does not improve. The ability to connect each VBP measure to specific physicians, nurse stations and other staff not just the roles and departments is necessary for full individual accountability. The needs of hospital leaders, who often want the intuitive and broader view of the complex key performance indicators of the health system, can be met with the right application, such as HCDs Top of Hospital dashboard. Administrators and managers can see trends in historic data, compare actual and budgeted values and predict future performance. They also can see how each business unit contributes to a specific metric. Here is a sampling of the type of questions that an administrator can answer:

based, and is it provided in one bundle, which can enhance speed to use, resulting in quicker results and ROI?

How are hospital admissions trending over time? Outpatient visits? ER visits? What is the average length of stay for patients? How does this compare to the target? How many inpatient and outpatient surgeries were performed last month? How does that compare to last month, or a year ago? What is the revenue history? What should revenue projections be? How much cash is on hand? Is that amount in accordance with the target?

Healthcare reform and the advent of Value-based Purchasing are creating a new paradigm for healthcare financial managers and executives, putting even greater pressures on them to effectively meet the new challenges that directly impact their bottom lines. By harnessing organizational data in an efficient manner, they will be positioned to make important and well-informed decisions that can contribute to ROI in nearly real time.

About the Author Pat Bickley is responsible for leading the collaborative technology teams that develop Health Care DataWorks product offerings. Bickleys extensive experience in multiple healthcare markets spans more than two decades. Prior to joining HCD, Bickley was the Director of Product Management with RelayHealth/McKesson. In this role she managed Revenue Cycle solutions for the hospital market. She also served as Director of Product Management at HTP, held a management position with CMHC Systems, and was a research consultant at Netsmart Technologies. About the Author Jude Odu is Senior Business Analyst and Healthcare Subject Matter Expert at Health Care DataWorks, where he develops applications and dashboards for the Product Development Department. He is the lead resource for the Clinical and Quality subject areas and product lines, and works with stakeholders to define and document business and clinical processes and software requirements for technology initiatives. Jude is a former Supervisor for Clinical Analytics and Decision Support at University Hospitals Case Medical Center in Northeast Ohio, where he led a team of clinical data analysts and system administrators in the Quality Institute and served as clinical lead for the implementation of UHs Business Intelligence/Enterprise Data Warehouse Quality Scorecard Project. Over his career, he has worked in long-term care, in acute care and on the payer side. He also teaches college courses in healthcare informatics. About Health Care DataWorks Health Care DataWorks, Inc., a leading provider of business intelligence solutions, empowers healthcare organizations to improve their quality of care and reduce costs. Through its pioneering KnowledgeEdge product suite, including its enterprise data model, analytic dashboards, applications, and reports, Health Care DataWorks delivers an Enterprise Data Warehouse necessary for hospitals and health systems to effectively and efficiently gain deeper insights into their operations. For more information, visit www.hcdataworks.com.

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Published: July 2012

2012 Health Care DataWorks, Inc. ALL RIGHTS RESERVED

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